Gazprom, Russia’s state-controlled gas producer, passed Britain’s BP on April 26 to become the world’s second-biggest energy company by market value after ExxonMobil. It already was the world’s biggest natural gas company and Russia’s biggest company. Gazprom’s share price has more than tripled in the past year as gas prices surged and the Russian government ended restrictions in January on foreign ownership of the company.
Gazprom got a further boost on April 26 when Morgan Stanley announced that it would increase its weighting six-fold in the MSCI Emerging Markets Index to 2.5% from 0.4% effective June 1. Gazprom, which supplies more than a quarter of Europe’s gas, has upgraded its depositary receipt program from a Regulation S program to a Level-I program.
The Bank of New York, which is acting as depositary bank for the program upgrade, says the Level-I DR program is an important component of the company’s long-term equity strategy. The Level-I program enables the conversion of Gazprom’s ordinary shares into DRs and vice versa. The depositary receipts can now be traded freely in the US over-the-counter market as well as on European stock markets, including the London Stock Exchange.
Gazprom, which is 51% state-owned, employs about 400,000 people and produces about 86% of Russian gas. “Although we have had our DR program for the better part of 10 years, the recent share liberalization affords us the opportunity to expand our equity presence throughout the international investment community,” says Alexey Miller, chairman of Gazprom.